Google’s Content Settlements Are Tacit Admission It Is an Essential Facility – Part 14 Google’s Disrespect for Property Series

Google’s recent public actions appear to be a tacit admission that its antitrust risks in the EU are more serious than it has acknowledged publicly.

First, Google’s recent newspaper settlements -- with the Belgian and the French media -- signal that Google appreciates it is now considered by the EU to be a de facto essential facility for consumer information access.

Why, after several years of insisting that Google would never pay for newspaper links in Google News as a matter of principle, would Google turn its business model around 180 degrees and settle its copyright infringement liabilities with the Belgian media for $6m in December, and settle its copyright infringement liabilities with the French media for $82m this month?

By effectively paying Belgium’s and France’s newspapers for content, Google has set a de facto precedent that Google is more than just a seller of advertising, but also now a buyer of subscription content. Apparently media in the rest of the EU appreciate the broader implications of this de facto Google-as-buyer precedent, because the European Publishers Council is now saying that Google must extend its deal to pay French newspapers for their headlines and snippets to all European newspapers.

Does this mean that Google now expects the EU antitrust authorities to rule effectively, (in either a settlement with, or Statement of Objections against Google) that Google is dominant and has abused its dominance in four ways, and that the EU considers Google to be a de facto essential facility for online information access?

Apparently, few have contemplated the logical broader implications for EU media interests of Google being ruled dominant and abusive of its dominance of online information access. In Google’s unique case, the logical other side of its advertising “monopoly power” is its information-access monopsony power. (Monopsony is one dominant buyer facing several sellers.)

(To learn more about Google’s monopsony power, see Googleopoly IV: The Googleopsony Case: How Google Extends its Search Monopoly to Monopsony over Digital Information.)

If Google is tacitly conceding that it is an essential facility for online information access in the EU, then their longstanding refusal to pay for profiting off of copyrighted material, their subsequent low-balling of payments for copyrighted content, and their aggressive lobbying to undermine copyright law, could be grounds for a monopsony abuse case by EU content providers against Google.

Google’s rush to settle with European newspapers with low-ball offers appears to be very shrewd business negotiating because Google knows if the negotiations occurred after the EU’s antitrust action is public, the effective settlement price likely would go way up.

The near coincident timing of these content deals with the resolution of the Google antitrust case suggest Google could be leveraging its inside knowledge of the outcome of the antitrust case to preemptively and anti-competitively self-limit the financial liability of its soon-to-be-determined monopsony power over content providers.

Google’s recent settlements to pay the Belgian and French media could raise even more serious issues.

It is no coincidence that in December Google settled first with the Belgian newspapers given that Brussels Belgium hosts the EU’s European Commission’s competition offices, and more importantly, given that EU competition authorities were poised to give Google an ultimatum to offer antitrust remedies by the end of January.

It is also no coincidence that Google settled with the French media second because the French privacy authorities (CNIL) are leading the EU’s investigation of Google’s violation of EU privacy law for not allowing users to opt out of Google’s privacy policy changes. In addition, the CNIL/EU is expected to effectively sanction Google for violating EU data privacy law in the coming months.

In both instances, the coincident timing of these settlements creates at least the appearance of potential impropriety on Google’s part, especially if Google somehow now expects a tacit quid pro quo has been reached, and a new appearance of conflict-of-interest has been created for the Belgian and French media to give Google, their new big customer, better antitrust and privacy media coverage going forward than they would have received otherwise.

At a minimum, it looks bad for Google to be paying local media millions of dollars, when Google publicly claims the payments are NOT for copyright infringement. If these payments are NOT for copyright infringement (as the Belgian and French media think), what is it actually that Google thinks it is paying newspapers many millions of Euros for – if not for favorable press at a critical time to protect its brand?

Google Chairman’s Sale of 42% of his Google Stock

It is irregular for a top company executive/insider to suddenly and rapidly accelerate the sale of 42% of their stock holdings in the company that they work for. It is even more irregular when the 48th wealthiest person in the world is nearly-halving his financial stake in his current employer – the equivalent of ~$2.5b or ~1% of one of the most valuable companies in the world.

When the person doing this sudden, rapid, and massive insider stock selling also happens to be the single person on earth with the most intimate, comprehensive, inside knowledge of the company’s growing cumulative financial liability for potential violations of antitrust, copyright, privacy, and tax laws, it is highly irregular and could raise red flags for public investors in Google and for the Securities and Exchange Commission (SEC).

Public investors could want to know if there is any known material negative inside information -- that is prompting Mr. Schmidt’s sudden and rapid liquidation of his personal holdings -- that public investors have a right to know? And does the more rapid sale of Mr. Schmidt’s stock signal that Mr. Schmidt may no longer plan to work for Google for the full twenty years that he has long signaled to public investors?

In sum, there appears to be a lot more going on here than the media has reported.